Published:

Wed,Jun 26th 2013 @ 9:18 am EDTbyChris Chmielenski

Republican supporters of the Gang of Eight's amnesty bill, S.744, have fought tirelessly to convince their GOP counterparts that the 11 million illegal aliens who receive amnesty under the bill won't be eligible for ObamaCare until they receive green cards 10 years down the road. But as Sen. Ted Cruz (R-Texas) pointed out yesterday, however, that's not the main "ObamaCare" concern with the bill. Instead, S.744 inadvertantly penalizes companies that hire American workers over amnestied illegal aliens beacuse of the "ObamaCare" tax.

Under ObamaCare, companies with 50 or more employees must provide all low-wage workers with a sufficient health insurance policy. If the company fails to do so, it faces a $3,000 fine per worker that's not tax deductible, so that actual penalty could be as much as $5,000 per employee when you consider the tax consequences.

As Sen. Cruz pointed out yesterday, S.744 grants legal status and work permits to most of the 11 million illegal aliens currently living in the United States. But the bill also exempts them from ObamaCare, so if an American company with at least 50 employees has a job opening for a low-skilled worker, the company would actually benefit financially by hiring the amnestied illegal alien over a U.S. citizen or legal permanent resident who also wants the job.

Here's how Sen. Cruz explained it on the Senate floor on Tuesday:

I would ask you to envision a small business: Joe's Burger Shack. Joe's Burger Shack is owned by a small business owner. It is a series of small fast food restaurants in any given State. It could be my home State of Texas or any State across the Union.

Let's assume that Joe's Burger Shack has 100 employees and that at Joe's Burger Shack, with 100 employees, business is doing relatively well, people are eating more hamburgers, and Joe decides he wants to hire 5 more people. If Joe and Joe's Burger Shack decide they want to hire five more people, if Joe chooses to hire five U.S. citizens or if he chooses to hire five legal permanent residents--five legal immigrants--Joe faces a penalty of $25,000 for doing so--$5,000 apiece right off his bottom line to the IRS. In contrast, if Joe decides instead to hire five RPIs, who came here illegally among those 11 million who are here illegally but granted RPI legalization under the Gang of 8 bill, Joe pays a penalty of zero dollars.

Let me ask a simple, commonsense question. In this instance, who is Joe, the small business owner, going to hire? This bill creates an enormous incentive to hire those here illegally, and at the same time it does it by creating a statutory penalty for hiring U.S. citizens and for hiring legal immigrants. That makes no sense.

-- Sen. Ted Cruz, Senate floor, June 25, 2013

This "ObamaCare" loophole isn't some hypothetical example conjured up by Sen. Cruz. He became aware of the situation when a restaurateur in Texas sent him a letter explaining how the loophole would benefit him as a business owner. (I've edited down the letter, but the full letter can be found in the Congressional record.)

My name is Allen Tharp. Since 1985, I have been the sole owner and CEO of Allen Tharp LLC, as well as the Lion and Rose restaurant chain, and a partner in the Golden Chick restaurants. Our corporate restaurants provide well over 1,000 jobs to fellow Texans, and our franchise restaurants provide many more.

I've been following the current debate over immigration reform very closely and want you to be aware that this bill, coupled with the new ObamaCare legislation, makes it much more affordable for a business like mine to employ Registered Provisional Immigrants than American workers. I do not believe that was the intention of either legislation, but it is the irrefutable effect of both. . .

If the current immigration bill before the Senate, however, is made law, a business could hire Registered Provisional Immigrants instead of U.S. citizens and avoid triggering ObamaCare regulations and fines.

Hiring RPIs over American workers, from a purely economic point of view, would be the best thing for my business. . .

Mr. Tharp wrote that he doesn't think taking advantage of the loophole is the right thing to do, and he likely won't, but he's more concerned about his competitors.

It's unlikely that the loophole will be closed up in the final hours of the Senate's consideration of S.744, so it's just one more reason to oppose the bill. Not only will the bill increase unemployment and decrease wages for American workers, but it will also provide an incentive for companies to hire amnestied illegal aliens over U.S. citizens and legal immigrants.

CHRIS CHMIELENSKI is the Director of Content & Activism for NumbersUSA

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